performance bond


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Related to performance bond: Bid bond

Performance bond

A surety bond between two parties, insuring one party against loss if the terms of a contract are not fulfilled. Usually part of a construction contract or supply agreement.

Performance Bond

A bond that a company issues to another guaranteeing repayment in case some project fails. For example, suppose a company hires a construction firm to build an apartment building. The construction firm may issue a performance bond to the company. If the apartment building is not constructed according to specifications, the company will not incur any losses because the construction company must repay the bond. This reduces the risk to the bondholder that another party to a contract will not fulfill its obligations.

performance bond

An insurance policy often required on government construction projects.If the contractor does not perform the work it contracted to do, the insurance company will either hire someone else to complete the job or will pay off the resulting damages, up to policy limits. Sometimes it is inaccurately called a performance and completion bond. Technically, liability under a performance bond is contingent on the contracting party paying according to the terms of its construction contract.Contrast with completion bond,where the contracting party does not have to pay anything to the insurance company,even though it might have been obligated to pay the contractor. As a result, most bonds are performance bonds and it is very difficult to obtain a completion bond.

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References in periodicals archive ?
Sheikh Mohammed has amended a law governing performance bonds in Dubai
After an Employer makes a call on a Performance Bond, the Contractor may have recourse to one of the following two remedies:
The decision as to whether a commercial developer/owner should ask for and require payment or performance bonds should be carefully examined.
"The town is pursuing all legal avenues to recover its loss, particularly on its performance bond that was not honored."
ARIX attempted to garnish Universal's performance bond held by DEQ.
'There is no evidence, documentary or otherwise, that respondents actually had knowledge of the subject Performance Bond and the conditions for its forfeiture,' the resolution read.
"The provision of a performance bond guarantee will offer confidence to operators and contractors in the process of controlling supply chain costs and project timetables."
The owner also sued the surety on the performance bond, also claiming that the pay on the bond, also claiming that the owner breached the contract.
Therefore, after extended discussions with our lead construction contractor, GRES, we have decided to notify them of our intention to call upon the Performance Bond to ensure an LFN solution is achieved as quickly as possible.
17, she issued another order requiring CMDC to pay a performance bond of P130 million and use biochar technology to rehabilitate the mined areas.
The Ombudsman said the officials also violated the procurement law by retaining the P500,000 bidder's bond of Comfac and treating it as a performance bond.

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